Wednesday, December 26, 2007

Fuel Subsidies — Beginning of the End

In Japan, petroleum fuels have reached the price level where people are screaming bloody murder and the government had to do something. That something has come in the form of massive fuelsubsidies. This is a watershed development, because it marks the point where Japan’s petroleum economy is no longer economically self-sustaining, and has to be propped up with tax money.

Cheap and plentiful oil energy developed Japan to the point of over-development. It has a vast network of roads, sea ports, airports, and populous oil-run cities. And the population — far greater than could be supported by Japan’s ecosystem alone — lives by eating oil.

But now oil is too expensive for low-income people and small businesses, and subsidies are needed. The handwriting is on the wall: the petroleum economy is beginning to crumble. In time oil will be too expensive to maintain existing roads, let alone build more. Airports will shut down. Food imports will grind to a halt.

How long will it take for Japan’s leadership to see that fuel subsidies aren’t the answer?